Budget for change

The cost of refurbishment is likely to be one of the biggest single outlays your business will ever make, so it's imperative to set a realistic budget. All reputable suppliers will provide full cost estimates free of charge, so you can communicate the real financial impact of the refurbishment to the rest of your business.

Beware of those surprising hidden costs! Get quotes for everything, and then draw up your budget. Remember to include:

  • Changes in your occupancy costs, particularly energy bills and maintenance costs

  • Transaction fees for agents and lawyers

  • Remember that any costs incurred by the landlord in drawing up a License to Alter will have to be met by your business

  • Planning permission fees

  • Insurance costs

  • Fire plan assessments

  • Design and fit out costs

  • Environmental assessments

  • IT and telecoms

    If you're using the opportunity to purchase new equipment, make sure this is included in the budget, along with any associated disposal costs. And take into account the moving of cabling and equipment during and after the works.

  • Furniture

    Along with the purchase, delivery and installation of new furniture, budget for the removal of any old furniture. Some charities will collect your furniture free of charge, and check out local office surplus companies who might be willing to take it off your hands.

  • Waste

    You'll probably find a lot of clutter and paperwork that isn't needed anymore. Look into recycling where possible, but be prepared to pay for rubbish to be removed.

  • Security

    • Your office is about to become a building site, meaning it will be hard to keep track of the comings and goings of staff and contractors. And because your office will be occupied during the refurbishment there'll be plenty of works done out of hours. Make sure you have sufficient security in place.
    • Temporary storage during the refurbishment
  • Contingency costs

    Budget for contingencies. Then include contingencies for your contingencies. It's not unusual to budget an additional 20% for unforeseen changes and extras.

  • Dilapidation costs

    Be aware that any alterations you make could impact on the cost of dilapidations at the end of your lease.

  • Mechanical and electrical

    Upgrading the air conditioning, heating and ventilation systems could use up a large percentage of your budget. Discuss possible contributions with your landlord.

  • Energy performance

    Part L of the Building Regulations refers to conservation of fuel and power. Introduced in 2006, the regulations set high standards for the refurbishment of buildings. These include new requirements for energy performance ratings including the setting of maximum CO2 limits.

The CRC (Carbon Reduction Commitment) Energy Efficiency Scheme is a new regulatory regime that is intended to encourage large, non-energy intensive businesses to improve their energy efficiency and reduce their carbon emissions.

Refurbishment tip

Go design and build. A JCT contract puts the onus on the contractor to complete the works on time and on budget. A multi-contractor approach means the responsibility lies with you.

Tax considerations

You're spending enough money for there to be plenty of opportunities for tax breaks.

  • Talk to an expert

    • Look into leasing options for the design & fit out works
    • Make the most of your Capital Allowances
    • Ask about Enhanced Capital Allowances for energy efficient or 'green' equipment and products
    • Look into 0% business loans (if you're an SME) from The Carbon Trust1, where your anticipated savings in energy costs fund the loan repayments

Ensure you're insured

Check that you, and your chosen office refurbishment partner, have all the necessary insurance cover in place, particularly:

    • Public Liability insurance
    • Professional Indemnity insurance
    • Contractors' 'All Risks' insurance

Decide when the best time is to carry out works

Minimise disruption

Your office design and refurbishment partner should have experience of carrying out works where 'business as usual' was paramount.

    • Discuss how much work can be done during office hours and what needs to be done out of hours
    • Ask for case studies of similar refurbishment in occupation projects where weekend and evening work was carried out
    • Talk to your partner about what other measures they put in place to minimise disruption, such as only disconnecting power & HVAC services out of office hours

Plan for swing space

Determining the layout of your new office isn't the only space planning required. You'll also need to plan where people will be sitting whilst works are in progress, and clarify what facilities (i.e. tea-points, toilets, etc) will be accessible.

    • Talk to your design and build partner about previous work they've done and how swing space was managed
    • Talk with other occupants in your building about access to their facilities if yours will be out of action for any length of time
    • The departments who work closely together will still want to be physically close in the swing space. Plan well to ensure that everybody's needs are met
    • Make sure staff know where they'll be moving well in advance - they're bound to have feedback

Prepare in advance

Carry out surveys well in advance to ensure that you order long lead-in items with sufficient time to build, deliver and install them.

    • Heating, ventilation and air conditioning
    • IT
    • Furniture & storage
    • Custom joinery
    • Sustainable elements

The incremental costs of sustainability are minimal if it is planned well in advance. If going 'green' is an afterthought, it could be expensive.

Refurbishment tip

Synchronise your calendars

Time is of the essence when decisions need to be made

    • When you work out your programme, factor in the holidays and commitments of your key stakeholders. Your managing director won't appreciate his holiday being interrupted because he needs to sign something by last Friday.
  1. Details of The Carbon Trust's interest-free business loans and how to apply can be found on their website www.carbontrust.co.uk